Intrinsic value of Delphi Automotive - DLPH

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$86.03

  Intrinsic Value

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  Value-price divergence*

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$86.03

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DLPH stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.86
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.45
  5.40
  5.36
  5.32
  5.29
Revenue, $m
  16,661
  18,527
  20,487
  22,540
  24,686
  26,925
  29,257
  31,684
  34,207
  36,831
  39,557
  42,390
  45,334
  48,394
  51,577
  54,887
  58,332
  61,919
  65,655
  69,549
  73,609
  77,844
  82,265
  86,880
  91,701
  96,740
  102,008
  107,517
  113,280
  119,312
  125,626
Variable operating expenses, $m
 
  15,416
  17,031
  18,723
  20,491
  22,335
  24,257
  26,256
  28,336
  30,497
  32,744
  34,927
  37,353
  39,875
  42,497
  45,224
  48,063
  51,018
  54,097
  57,305
  60,650
  64,140
  67,782
  71,585
  75,557
  79,709
  84,049
  88,588
  93,337
  98,307
  103,509
Fixed operating expenses, $m
 
  956
  980
  1,005
  1,030
  1,056
  1,082
  1,109
  1,137
  1,165
  1,194
  1,224
  1,255
  1,286
  1,318
  1,351
  1,385
  1,420
  1,455
  1,492
  1,529
  1,567
  1,606
  1,646
  1,688
  1,730
  1,773
  1,817
  1,863
  1,909
  1,957
Total operating expenses, $m
  14,787
  16,372
  18,011
  19,728
  21,521
  23,391
  25,339
  27,365
  29,473
  31,662
  33,938
  36,151
  38,608
  41,161
  43,815
  46,575
  49,448
  52,438
  55,552
  58,797
  62,179
  65,707
  69,388
  73,231
  77,245
  81,439
  85,822
  90,405
  95,200
  100,216
  105,466
Operating income, $m
  1,874
  2,155
  2,476
  2,813
  3,165
  3,534
  3,918
  4,318
  4,735
  5,168
  5,619
  6,239
  6,726
  7,234
  7,762
  8,312
  8,884
  9,481
  10,104
  10,753
  11,430
  12,138
  12,877
  13,649
  14,457
  15,301
  16,186
  17,111
  18,080
  19,096
  20,160
EBITDA, $m
  2,578
  2,901
  3,285
  3,688
  4,109
  4,550
  5,009
  5,487
  5,985
  6,502
  7,041
  7,601
  8,183
  8,789
  9,419
  10,075
  10,759
  11,471
  12,213
  12,988
  13,796
  14,639
  15,520
  16,441
  17,403
  18,410
  19,464
  20,566
  21,721
  22,930
  24,196
Interest expense (income), $m
  145
  143
  182
  224
  268
  313
  361
  411
  463
  516
  572
  631
  691
  754
  819
  887
  958
  1,031
  1,107
  1,187
  1,270
  1,357
  1,447
  1,541
  1,640
  1,743
  1,850
  1,962
  2,080
  2,203
  2,332
Earnings before tax, $m
  1,425
  2,012
  2,294
  2,589
  2,898
  3,220
  3,557
  3,907
  4,272
  4,652
  5,046
  5,608
  6,035
  6,480
  6,943
  7,425
  7,927
  8,450
  8,996
  9,565
  10,160
  10,781
  11,429
  12,108
  12,817
  13,559
  14,335
  15,149
  16,000
  16,893
  17,828
Tax expense, $m
  242
  543
  619
  699
  782
  869
  960
  1,055
  1,153
  1,256
  1,363
  1,514
  1,630
  1,750
  1,875
  2,005
  2,140
  2,282
  2,429
  2,583
  2,743
  2,911
  3,086
  3,269
  3,461
  3,661
  3,871
  4,090
  4,320
  4,561
  4,814
Net income, $m
  1,257
  1,469
  1,674
  1,890
  2,115
  2,351
  2,596
  2,852
  3,119
  3,396
  3,684
  4,094
  4,406
  4,730
  5,068
  5,420
  5,787
  6,169
  6,567
  6,983
  7,417
  7,870
  8,343
  8,839
  9,356
  9,898
  10,465
  11,059
  11,680
  12,332
  13,014

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  838
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,292
  12,733
  14,081
  15,492
  16,966
  18,505
  20,108
  21,776
  23,510
  25,313
  27,187
  29,134
  31,157
  33,261
  35,448
  37,723
  40,091
  42,556
  45,124
  47,800
  50,590
  53,501
  56,539
  59,711
  63,025
  66,488
  70,108
  73,895
  77,856
  82,001
  86,341
Adjusted assets (=assets-cash), $m
  11,454
  12,733
  14,081
  15,492
  16,966
  18,505
  20,108
  21,776
  23,510
  25,313
  27,187
  29,134
  31,157
  33,261
  35,448
  37,723
  40,091
  42,556
  45,124
  47,800
  50,590
  53,501
  56,539
  59,711
  63,025
  66,488
  70,108
  73,895
  77,856
  82,001
  86,341
Revenue / Adjusted assets
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
Average production assets, $m
  4,758
  5,299
  5,859
  6,447
  7,060
  7,700
  8,367
  9,061
  9,783
  10,534
  11,313
  12,123
  12,966
  13,841
  14,751
  15,698
  16,683
  17,709
  18,777
  19,891
  21,052
  22,263
  23,528
  24,848
  26,227
  27,668
  29,174
  30,750
  32,398
  34,123
  35,929
Working capital, $m
  1,271
  500
  553
  609
  667
  727
  790
  855
  924
  994
  1,068
  1,145
  1,224
  1,307
  1,393
  1,482
  1,575
  1,672
  1,773
  1,878
  1,987
  2,102
  2,221
  2,346
  2,476
  2,612
  2,754
  2,903
  3,059
  3,221
  3,392
Total debt, $m
  3,971
  5,056
  6,217
  7,434
  8,705
  10,031
  11,413
  12,851
  14,346
  15,900
  17,515
  19,193
  20,938
  22,751
  24,636
  26,597
  28,638
  30,763
  32,977
  35,284
  37,689
  40,198
  42,817
  45,551
  48,408
  51,393
  54,513
  57,777
  61,192
  64,765
  68,506
Total liabilities, $m
  9,891
  10,976
  12,137
  13,354
  14,625
  15,951
  17,333
  18,771
  20,266
  21,820
  23,435
  25,113
  26,858
  28,671
  30,556
  32,517
  34,558
  36,683
  38,897
  41,204
  43,609
  46,118
  48,737
  51,471
  54,328
  57,313
  60,433
  63,697
  67,112
  70,685
  74,426
Total equity, $m
  2,401
  1,757
  1,943
  2,138
  2,341
  2,554
  2,775
  3,005
  3,244
  3,493
  3,752
  4,020
  4,300
  4,590
  4,892
  5,206
  5,533
  5,873
  6,227
  6,596
  6,981
  7,383
  7,802
  8,240
  8,697
  9,175
  9,675
  10,197
  10,744
  11,316
  11,915
Total liabilities and equity, $m
  12,292
  12,733
  14,080
  15,492
  16,966
  18,505
  20,108
  21,776
  23,510
  25,313
  27,187
  29,133
  31,158
  33,261
  35,448
  37,723
  40,091
  42,556
  45,124
  47,800
  50,590
  53,501
  56,539
  59,711
  63,025
  66,488
  70,108
  73,894
  77,856
  82,001
  86,341
Debt-to-equity ratio
  1.654
  2.880
  3.200
  3.480
  3.720
  3.930
  4.110
  4.280
  4.420
  4.550
  4.670
  4.770
  4.870
  4.960
  5.040
  5.110
  5.180
  5.240
  5.300
  5.350
  5.400
  5.440
  5.490
  5.530
  5.570
  5.600
  5.630
  5.670
  5.700
  5.720
  5.750
Adjusted equity ratio
  0.136
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,257
  1,469
  1,674
  1,890
  2,115
  2,351
  2,596
  2,852
  3,119
  3,396
  3,684
  4,094
  4,406
  4,730
  5,068
  5,420
  5,787
  6,169
  6,567
  6,983
  7,417
  7,870
  8,343
  8,839
  9,356
  9,898
  10,465
  11,059
  11,680
  12,332
  13,014
Depreciation, amort., depletion, $m
  704
  746
  809
  875
  944
  1,016
  1,091
  1,169
  1,250
  1,334
  1,422
  1,362
  1,457
  1,555
  1,657
  1,764
  1,874
  1,990
  2,110
  2,235
  2,365
  2,502
  2,644
  2,792
  2,947
  3,109
  3,278
  3,455
  3,640
  3,834
  4,037
Funds from operations, $m
  1,969
  2,215
  2,484
  2,765
  3,059
  3,367
  3,687
  4,021
  4,369
  4,730
  5,106
  5,456
  5,863
  6,286
  6,726
  7,184
  7,661
  8,158
  8,677
  9,218
  9,782
  10,371
  10,987
  11,630
  12,303
  13,007
  13,743
  14,514
  15,321
  16,166
  17,051
Change in working capital, $m
  28
  50
  53
  55
  58
  60
  63
  66
  68
  71
  74
  76
  79
  83
  86
  89
  93
  97
  101
  105
  110
  114
  119
  125
  130
  136
  142
  149
  156
  163
  170
Cash from operations, $m
  1,941
  2,162
  2,431
  2,710
  3,002
  3,306
  3,624
  3,956
  4,300
  4,659
  5,032
  5,380
  5,783
  6,203
  6,640
  7,095
  7,568
  8,062
  8,576
  9,113
  9,673
  10,257
  10,868
  11,506
  12,173
  12,871
  13,601
  14,365
  15,165
  16,003
  16,881
Maintenance CAPEX, $m
  0
  -535
  -595
  -658
  -724
  -793
  -865
  -940
  -1,018
  -1,099
  -1,184
  -1,271
  -1,362
  -1,457
  -1,555
  -1,657
  -1,764
  -1,874
  -1,990
  -2,110
  -2,235
  -2,365
  -2,502
  -2,644
  -2,792
  -2,947
  -3,109
  -3,278
  -3,455
  -3,640
  -3,834
New CAPEX, $m
  -828
  -541
  -561
  -587
  -614
  -640
  -667
  -694
  -722
  -750
  -780
  -810
  -842
  -875
  -910
  -947
  -985
  -1,026
  -1,069
  -1,114
  -1,161
  -1,211
  -1,264
  -1,320
  -1,379
  -1,441
  -1,507
  -1,576
  -1,648
  -1,725
  -1,806
Cash from investing activities, $m
  -578
  -1,076
  -1,156
  -1,245
  -1,338
  -1,433
  -1,532
  -1,634
  -1,740
  -1,849
  -1,964
  -2,081
  -2,204
  -2,332
  -2,465
  -2,604
  -2,749
  -2,900
  -3,059
  -3,224
  -3,396
  -3,576
  -3,766
  -3,964
  -4,171
  -4,388
  -4,616
  -4,854
  -5,103
  -5,365
  -5,640
Free cash flow, $m
  1,363
  1,086
  1,275
  1,464
  1,663
  1,873
  2,092
  2,321
  2,561
  2,810
  3,069
  3,298
  3,579
  3,871
  4,174
  4,490
  4,819
  5,161
  5,518
  5,889
  6,276
  6,680
  7,102
  7,542
  8,002
  8,483
  8,985
  9,511
  10,062
  10,638
  11,241
Issuance/(repayment) of debt, $m
  -44
  1,097
  1,161
  1,216
  1,271
  1,326
  1,382
  1,438
  1,495
  1,554
  1,615
  1,678
  1,744
  1,813
  1,885
  1,961
  2,041
  2,125
  2,213
  2,307
  2,405
  2,509
  2,619
  2,734
  2,856
  2,985
  3,121
  3,264
  3,415
  3,573
  3,741
Issuance/(repurchase) of shares, $m
  -634
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -764
  1,097
  1,161
  1,216
  1,271
  1,326
  1,382
  1,438
  1,495
  1,554
  1,615
  1,678
  1,744
  1,813
  1,885
  1,961
  2,041
  2,125
  2,213
  2,307
  2,405
  2,509
  2,619
  2,734
  2,856
  2,985
  3,121
  3,264
  3,415
  3,573
  3,741
Total cash flow (excl. dividends), $m
  576
  2,183
  2,436
  2,680
  2,935
  3,199
  3,474
  3,759
  4,056
  4,364
  4,684
  4,977
  5,323
  5,684
  6,060
  6,452
  6,860
  7,286
  7,731
  8,196
  8,682
  9,190
  9,721
  10,277
  10,858
  11,468
  12,106
  12,775
  13,476
  14,211
  14,982
Retained Cash Flow (-), $m
  -151
  -182
  -186
  -195
  -204
  -212
  -221
  -230
  -239
  -249
  -259
  -269
  -279
  -290
  -302
  -314
  -327
  -340
  -354
  -369
  -385
  -402
  -419
  -438
  -457
  -478
  -500
  -523
  -547
  -572
  -599
Prev. year cash balance distribution, $m
 
  826
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,827
  2,250
  2,486
  2,731
  2,987
  3,253
  3,529
  3,816
  4,115
  4,426
  4,708
  5,044
  5,394
  5,758
  6,138
  6,533
  6,946
  7,377
  7,827
  8,297
  8,788
  9,301
  9,839
  10,401
  10,990
  11,607
  12,252
  12,929
  13,639
  14,383
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  2,685
  2,019
  2,096
  2,152
  2,186
  2,196
  2,183
  2,147
  2,088
  2,008
  1,893
  1,781
  1,654
  1,517
  1,374
  1,227
  1,080
  937
  800
  672
  554
  449
  357
  279
  213
  159
  116
  82
  57
  39
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Delphi Automotive PLC, together with its subsidiaries, manufacturers vehicle components; and provides electrical and electronic, powertrain, and safety technology solutions to the automotive and commercial vehicle markets worldwide. It operates through three segments: Electrical/Electronic Architecture, Powertrain Systems, and Electronics and Safety. The Electrical/Electronic Architecture segment offers complete design of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, electrical centers, and hybrid high voltage and safety distribution systems. The Powertrain Systems segment offers systems integration of end-to-end gasoline and diesel engine management systems comprising fuel handling, fuel injection, combustion, electronic controls, test and validation capabilities, electric and hybrid electric vehicle power electronics, aftermarket, and original equipment services. The Electronics and Safety segment provides critical components, systems, and software for passenger safety, security, comfort, and infotainment, as well as vehicle operation consisting of body controls, infotainment and connectivity systems, passive and active safety electronics, autonomous driving technologies and displays. This segment also develops software. The company sells its products to the original equipment manufacturers (OEMs); and aftermarket for replacement parts, including the aftermarket operations of its OEM customers, as well as to other distributors and retailers. Delphi Automotive PLC is based in Gillingham, the United Kingdom.

FINANCIAL RATIOS  of  Delphi Automotive (DLPH)

Valuation Ratios
P/E Ratio 18.5
Price to Sales 1.4
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow 20.9
Growth Rates
Sales Growth Rate 9.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.6%
Cap. Spend. - 3 Yr. Gr. Rate 6.5%
Financial Strength
Quick Ratio 70
Current Ratio 0
LT Debt to Equity 164.9%
Total Debt to Equity 165.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 12.7%
Return On Total Capital 19.9%
Ret/ On T. Cap. - 3 Yr. Avg. 24%
Return On Equity 54.1%
Return On Equity - 3 Yr. Avg. 54.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 20.2%
EBITDA Margin 13.6%
EBITDA Margin - 3 Yr. Avg. 14.2%
Operating Margin 11.2%
Oper. Margin - 3 Yr. Avg. 11%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 9.6%
Net Profit Margin 7.5%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 17%
Eff/ Tax Rate - 3 Yr. Avg. 16.7%
Payout Ratio 25.2%

DLPH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DLPH stock intrinsic value calculation we used $16661 million for the last fiscal year's total revenue generated by Delphi Automotive. The default revenue input number comes from 2016 income statement of Delphi Automotive. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DLPH stock valuation model: a) initial revenue growth rate of 11.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for DLPH is calculated based on our internal credit rating of Delphi Automotive, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Delphi Automotive.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DLPH stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $933 million in the base year in the intrinsic value calculation for DLPH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.6% for Delphi Automotive.

Corporate tax rate of 27% is the nominal tax rate for Delphi Automotive. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DLPH stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DLPH are equal to 28.6%.

Life of production assets of 8.9 years is the average useful life of capital assets used in Delphi Automotive operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DLPH is equal to 2.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2401 million for Delphi Automotive - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 265.859 million for Delphi Automotive is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Delphi Automotive at the current share price and the inputted number of shares is $22.9 billion.


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Stock chart of DLPH Financial statements of DLPH Annual reports of DLPH
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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